Understanding Tax Deduction on Donations

Hello and welcome to Part 19 of the Income Tax education series brought to you by H&R Block, the global leader in filing Income Tax Returns. Today we will understand whether donations to various charitable institutions are tax deductable.

Donations to charitable institutions are eligible for a deduction from your taxable income. However there is a condition that these charitable institutions should be registered under section 80G, 80GGA or 35AC. Depending on the type of organisation or fund that you donate to you will either receive a 100% or 50% of the amount donated as deduction from your income. Example, if Tara donates Rs. 10,000 to a relief fund registered under section 80G then she will receive a deduction of only 50% of Rs. 10,000 i.e. Rs. 5,000 as a deduction from your taxable income. However if Tara donates to the Swachh Bharat Kosh that has been recently added to the 80GGA registered funds by the FM in Finance Bill 2015, then she will receive the entire amount of Rs. 10,000 as a deduction. Whereas salaried people get a deduction under section 80 GGA, people who earn income from business and profession get a 100% deduction under section 35AC.

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